Three Gorges Probe

Xiluodu Hydropower Project Draws Auditors’ Criticism

(July 21, 2009) The Xiluodu hydropower project, China’s second-largest hydropower station, is under fire from government auditors for weak spending controls, costly contract alterations to speed up the project and other problems.

An initial audit report issued on July 20 by the National Audit Office said irregularities emerged at the project.

Construction on the Xiluodu project, second only to the Three Gorges Project in China, started in 2003 on the Yangtze River’s upper reaches. The project is being undertaken by the China Three Gorges Project Corp (CTGPC), a state-owned hydropower investor and owner of the Three Gorges Dam. The dam, costing 67.5 billion yuan, is expected to be operational in 2015.

The auditors said CTGPC had not established strict cost controls at Xiluodu and failed to compile cost figures of the finished subprojects, which are used to estimate the divergence between cost and budget and then to prevent waste and fraud.

The auditor also noted that shortened construction periods had raised risks and costs. The current duration of the project is 27 months shorter than in the original blueprint. To accelerate work on 45 subprojects, CTGPC had 33 percent of the existing contracts altered, leading to unnecessary costs of 600 million yuan, the auditors said.

The auditor also said that of the 464 subprojects that should have been put up for bids, 219 hadn’t gone through that process. The auditor also found the resettlement of people relocated from the Xiluodu reservoir region had not yet concluded.

The auditor urged CTGPC to address these problems expeditiously and improve the efficiency of funds invested in the project.

The costs of Xiluodu and other large infrastructure projects have drawn heightened scrutiny in recent years from the media and the National Audit Office. The Xiluodu project has also drawn media coverage of the environmental and sociological impact on local communities.

1 yuan = 14 U.S.cents

Full article in Chinese

Zhang Yanling, Caijing.com.cn, July 21, 2009

Categories: Three Gorges Probe

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